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|
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| | Could you state your full name for the record, |
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| please. |
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| | A. Lawrence Joseph Ellison. |
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| | Q. And what is your current work address, |
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| Mr. Ellison? |
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| | A. 500 Oracle Parkway, Redwood Shores, California. |
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| | MR. SCOTT: Q. Before we get into the document, |
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| let me just nail down a couple of pieces of terminology |
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| you used in some of your earlier questions. |
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| | In talking about PeopleSoft you said that they |
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| had obviously an H.R. product; right? |
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| | A. Yes. |
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| | Q. And that they had a financial management |
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| product? |
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| | A. Yes. |
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| | Q. And then you indicated they also had a business, |
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| an ERP suites business? |
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| | A. Yes. |
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| | Q. Could you tell me - I'm not sure we had you |
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| define what that term means yet, what "ERP suite |
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| business" is. |
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| | A. ERP means enterprise resource planning, but |
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| that's not terribly illuminating, that title. It's the |
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| back office portion of the business. It's accounting, |
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| human resources, payroll, manufacturing, planning, |
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| purchasing, your supply chain, which is just basically a |
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| chain of all of the suppliers you might need if you're a |
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| manufacturer. |
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| | It's all the things that happen in the back |
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| office of a company as opposed to the front office, which |
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| might be usually characterized as sales, marketing and |
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| service. So the front office is called CRM, customer |
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| relationship management, the back office is called ERP. |
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| All of the products that automate the back office are |
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| called an ERP suite. |
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| | Q. Your business solutions product, that's an ERP |
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| suite product? |
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| | A. E-business suite? |
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| | Q. Yes, sir. |
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| | A. It is both an ERP suite and a CRM suite. |
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| | Q. Has both in there, depending upon what - |
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| | A. The union of those two, yes. |
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| | Q. Do you sell financial services - I'm sorry, |
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| financial management software and H.R. software in a |
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| combination in any other context other than your |
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| E-business suite? |
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| | A. Not a combination, we sell them separately. You |
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| buy H.R. separately and buy financials separately or you |
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| can buy E-business suite, which includes them both and |
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| many other components, as well. |
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| | Q. The E-business suite, when did that product |
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| first become available through Oracle? |
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| | A. Again, it's an estimate, four years ago. |
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| | Q. Was there a reason you started offering the |
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| products combined like that? |
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| | A. We tried to be the first company ~ I |
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| mentioned -- you asked if we had been leap-frogged |
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| before. SAP leaped-frogged us by getting all the back |
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| office modules working on top of a single data base and |
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| SAP really invented the term "ERP." They were the first |
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| ERP suite. |
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| | We, in turn, were trying to leapfrog them by |
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| having the first suite of products working on one data |
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| base that included all the front office modules, all the |
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| CRM products as well as all the back office ERP products. |
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| | Q. I'm going to hazard a guess, but when you were |
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| trying to market this product, you'd tell customers there |
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| are advantages of having it brought together in one |
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| package; correct? |
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| | A. Yes. |
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| | Q. What are those advantages? |
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| | A. Lower cost, better information. |
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| | Q. How does having the product sold, the ERP suite, |
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| result in lower cost and better information? |
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| | A, If you -- cither if you buy discreet components, |
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| you buy your H.R. from PeopleSoft, you buy your sales |
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| force automation from Siebel, or your call center from |
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| Siebel and your sales force automation from |
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| Salesforce.com and your accounting from SAP, and your |
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| H.R. from PeopleSoft, if you buy a lot of separate |
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| pieces, you're going to have to do what's called software |
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| integration or systems integration. |
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| | You're going to have to connect these pieces |
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| that were never engineered to fit together. You, as a |
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| customer, are going to have to use your own labor or hire |
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| a consultant to fit these pieces together. And what we |
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| wanted ~ what our offer -- the contrasting aspect of our |
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| offer is we've engineered these pieces to fit together. |
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| You don't have to do any software integration. |
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| | So it's much lower cost. It's much less labor |
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| involved in putting in our suite than what's called best |
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| of breed components, a lot of separate components from |
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| separate suppliers. So there is less labor associated |
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| with it, gives you a much less cost of ownership. |
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| | The other thing is, because of all of our |
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| applications are engineered around a single data base, |
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| all your information is in one place, therefore, everyone |
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| knows where to look to find the information. So you get |
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| a much higher quality of information. |
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| | The worst problem facing companies, government |
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| agencies, information problem, is that their data is |
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| fragmented; it's stored in lots and lots of different |
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| places and people have a very hard time finding what |
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| they're looking for, they don't even know where to look. |
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| | Companies, government agencies, have lots and |
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| lots of separate data bases. If you build your |
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| application around a single, unified data base, it's much |
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| easier to get accurate, up-to-date information about your |
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| business. |
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| | Q. Did you -- does PeopleSoft have something that |
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| you consider an integrated FRP product? |
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| | A. Yes. |
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| | Q. What does that consist of? |
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| | A. Well, you can argue about the degree of |
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| integration, but it means that the pieces are at least |
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| partially engineered to fit together. We'd argue that |
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| ours really were, again, conceived around this common |
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| data model. |
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| | We would say the PeopleSoft H.R. isn't even |
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| integrated with their financials, they operate on |
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| separate data bases. So -- so we think we're more |
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| integrated. But it's not an all or nothing thing. There |
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| are advantages. There are connections between PeopleSoft |
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| H.R. and PeopleSoft financials, though they don't use a |
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| common data base. Our big pitch is we store everything |
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| in one data base. SAP doesn't do that and PeopleSoft |
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| doesn't do that. |
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| | Q. You used a term a bit ago, a best of breed; what |
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| is that? |
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| | A. That's the notion of-- it's an industry term, |
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| meaning rather than trying to find the best suite |
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| supplier, you go out and find individual vendors who |
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| offer the best marketing package, the best sales package, |
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| the best service package, the best financial package, the |
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| best H.R. package, the best payroll package, you find the |
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| best suppliers and you buy from the best suppliers, |
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| ignoring the integration issues, you just get the best |
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| parts. |
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| | And I actually have a bit of a satire |
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| presentation I make. What a wonderful way to buy a car. |
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| Maybe Porsche makes the best fuel injection, maybe |
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| Mercedes makes the best transmission, Cadillac makes the |
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| best air-conditioning, and the best catalytic converter |
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| comes from Ford, but these pieces were never designed to |
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| fit together. And they might be the very best components |
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| but the best components don't assemble into the best |
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| system. |
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| | But it was the normal -- it was conventional for |
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| a lot of companies to go ahead and buy, you know, the |
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| best components, then those companies took on the burden |
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| of assembling those components into a working system. |
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| | Q. In addition to assembling best of breed |
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| components into a working system, are you likely to have |
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| problems in making them to continue to work together over |
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| time? |
Ellison 01-20-04 8
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00135 |
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| | A. Systems integration is a gift that keeps on |
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| giving. |
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| | Q. Meaning what? |
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| | A. Every time -- let's say SAP upgrades their |
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| accounting, so you have to unplug the SAP accounting from |
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| your H.R. -- your Siebel sales and your PeopleSoft H.R, |
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| and plug in the new version. |
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| | So this is an ongoing cost as you do upgrades. |
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| These vendors use different technologies, they have |
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| different upgrade cycles, all of the labor associated |
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| with connecting SAP to PeopleSoft 7, you have to do it |
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| again. Now you connect SAP to PeopleSoft 8. |
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| | Q. So any upgrade you did to any piece of it, |
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| you're going to have to go back and reconfigure the |
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| entire system? |
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| | A. It's the gift that keeps on giving. |
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| | Q. To the people who actually do the work for you? |
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| | A. Absolutely. That's why the biggest recommenders |
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| of best of breed are the IBM's and Accentures, who |
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| provide the labor for gluing it all together. |
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| | Q. The best - you indicated -- again, I'm not |
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| trying to misstate you. so correct me if I got this |
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| wrong -- I thought you'd said something fee best of breed |
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| approach was the norm at one point in time. |
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| | A. Very recently -- there was a huge debate in the |
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| A. Very recently -- there was a huge debate in the |
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| early, there was a huge controversy inside of Oracle and |
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| we were considered mad by some because we were the first |
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| company to move to the Internet. We were also the first |
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| company to say that the best of breed is -- only works at |
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| dog shows and it's really the gift that keeps on giving. |
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| It's unbelievably expensive for companies to talk to best |
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| of breed strategy. |
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| | No one buys car parts and takes those parts and |
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| assembles them into cars. What you should do is buy a |
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| complete and integrated suite where the pieces are |
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| designed to work together. You should look to suite |
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| suppliers and the suite suppliers arc going to win and |
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| the best of breed companies are going to lose. |
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| | Q. When you say the suite suppliers are going to |
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| win and best of breed companies are going to lose, what |
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| do you mean by that? |
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| | A. That means if you arc a specialist -- let's say |
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| all you do is supply chain, company like i2, but you had |
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| the best supply chain software in the world, and mayt |
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| still have the best supply chain software in the world, |
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| the cost of installing it, the cost of connecting it to |
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| Oracle or to Oracle manufacturing or SAP manufacturing |
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| and purchasing, all of those different pieces, the cost |
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| of connecting it was so high, that you're much better off |
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| if you buy your financials and manufacturing from SAP. |
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| You should probably get your supply chain software from |
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| SAP, as well. |
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| | If you buy your manufacturing and purchasing |
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| software from Oracle, you probably should buy your supply |
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| chain software from Oracle, as well. It's much, much |
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| cheaper than trying to put in that -- glue in that i2 |
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| problem. |
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